1. Under the Kansas Health Care Provider Insurance Act, every
resident health care provider, including physicians, is required to maintain a
policy of professional liability insurance. Subject to certain liability
limits, the Fund is responsible for paying that amount of any judgment in
excess of the basic coverage of the resident health care provider.

2. The Kansas Tort Claims Act, K.S.A. 75-6101 et seq., states that unless a
statutory
exception to liability applies, a governmental entity shall be liable for damages caused
by the negligent or wrongful act or omission of any of its employees while acting
within the scope of their employment under circumstances where the governmental
entity, if a private person, would be liable under the laws of this state. K.S.A. 75-6103(a).

4. Under the Kansas Health Care Provider Insurance Act, every resident health care
provider, including physicians, is required to maintain a policy of professional liability
insurance. The Fund is responsible for paying that amount of any judgment in excess
of the basic coverage of the resident health care provider.

5. To prove the tort of outrage, a litigant must show: (1) The conduct of the defendant
was intentional or in reckless disregard of the plaintiff; (2) the conduct was extreme
and outrageous; (3) there was a causal connection between the defendant's conduct and
the plaintiff's mental distress; and (4) the plaintiff's mental distress was extreme and
severe.

6. The tort of outrage has two threshold requirements that the district court must
determine: (1) whether the defendant's conduct may reasonably be regarded as so
extreme and outrageous as to permit recovery; and (2) whether the emotional distress
suffered by the plaintiff was of such extreme degree the law must intervene because
the distress inflicted was so severe that no reasonable person should be expected to
endure it.

Stephen W. Brown, of Megaffin, Brown & Lynch, Chtd., of Pratt,
argued the cause, and Gene E. Schroer,
of Schroer, Rice, P.A., of Topeka, was with him on the briefs for appellant/cross-appellee.

Steve A. Schwarm, special assistant attorney general, of Goodell, Stratton,
Edmonds & Palmer, L.L.P.,
of Topeka, argued the cause, and Wayne T. Stratton, of the same firm, was with him
on the brief for appellees
State of Kansas, Health Care Stabilization Fund, and Robert Hayes.

Paul W. Rebein, of Shook, Hardy & Bacon, L.L.P., of Overland Park,
argued the cause, and Kenneth J.
Reilly, of the same firm, was with him on the brief for appellee St. Paul Fire & Marine
Insurance Company.

Hal D. Meltzer, of Turner and Boisseau, Chartered, of Overland Park,
argued the cause, and Gabrielle
Rhodes and Gregory N. Pottorff, of the same firm, were with him on the briefs
for appellees/cross-appellants
Sloan, Listrom, Eisenbarth, Sloan & Glassman, Thomas L. Theis, and Derenda J. Mitchell.

Damian C. Hornick, of Kansas Insurance Department, was on the brief for
appellee Kathleen Sebelius,
in her official capacity as Commissioner of Insurance.

Joseph R. Colantuono, of Wehrman & Colantuono, of Leawood, and
Joshua L. Prober and Rachel M.
Krug, of McCullough, Campbell & Lane, of Chicago, appeared on the amici
curiae brief for the American
Osteopathic Association and Kansas Association of Osteopathic Medicine.

The opinion of the court was delivered by

LOCKETT, J.: Physician, who was alleged to have committed medical malpractice,
filed an action against his malpractice insurer, the health care stabilization fund, and his
attorneys and the attorneys' firm retained by the insurer to represent him. Physician claimed
that the defendants had in bad faith settled the malpractice claim against him without
informing him or obtaining his consent to the settlement. The district court granted each of
the defendants' motions for dismissal and for summary judgment. Physician appeals the
district court's orders: (1) dismissing the fund and the Commissioner of Insurance based on
governmental immunity; (2) granting summary judgment to physician's attorneys and the
attorneys' law firm, and (3) granting summary judgment in favor of the physician's liability
insurance carrier regarding the physician's claim of negligent and wrongful settlement of the
patient's malpractice claim. Physician's attorneys and the attorneys' law firm cross-appealed,
claiming the district court erred in finding the attorneys had breached their duty to inform a
client. The attorneys also argue that the physician's failure to set aside the settlement
agreement pursuant to K.S.A. 60-260(b)(6) bars his claim.

This civil action by Stephen W. Miller, D.O., arose out of a medical malpractice claim
relating to his patient's injury that occurred in the surgical operating room of the Coffeyville
Regional Medical Center, in Montgomery County, Kansas, on January 21, 1992. During the
administration of anesthesia by a nurse anesthesiologist, the patient suffered severe brain
damage.

Shortly after the injury, the patient's attorney contacted Miller and advised him that
the patient intended to file a malpractice suit. Miller advised his professional liability
insurance carrier, St. Paul Fire & Marine Insurance Company (St. Paul), of the patient's
intention. St. Paul retained Thomas Theis, an attorney with Sloan, Listrom, Eisenbarth,
Sloan & Glassman, to defend the claim. St. Paul's investigation of the claim included: a
telephone interview with Miller, a peer evaluation of the medical event leading to the claim,
an evaluation of pertinent medical records, and a poll of several attorneys to assess the
possibility of Miller being found liable for the patient's injuries and to estimate the damages.

Following its investigation and upon determining that the injury presented a
significant risk of a verdict far in excess of Miller's policy limits, St. Paul tendered to the
Kansas Health Care Stabilization Fund (Fund) payment equal to the policy limits of Miller's
liability insurance policy. Theis was then retained to represent the interest of the Fund and
to continue his representation of Miller during the settlement negotiations between the Fund
and the patient.

K.S.A. 40-3410 provided the authority and procedure for the commissioner of
insurance to negotiate and settle claims by a claimant on behalf of the Fund. The settlement
agreement in this case provided that Miller did not admit liability for any wrong and that he
denied he was negligent in the treatment of the patient. The settlement agreement also
provided that the plaintiff released Miller from all claims, present and future. Because there
was no pending action in Montgomery County, the petition was filed in Shawnee County.

On November 24, 1992, a settlement hearing was held in the Shawnee County District
Court. Because Theis could not attend the hearing, Miller was represented by Derenda
Mitchell, another attorney with Sloan, Listrom, Eisenbarth, Sloan and Glassman. Although
Mitchell stated to the court that Miller had approved the settlement and did not object to the
matter being heard in Shawnee County rather than Montgomery County, Miller had not, in
fact, been notified of the settlement hearing or that the hearing was being held in Shawnee
County, nor had Miller approved the settlement. The district court approved the settlement,
finding it was valid, just, and equitable.

The settlement of the malpractice claim was later reported on the National
Practitioner Data Bank in December 1992. Miller's malpractice insurance with St. Paul was
terminated on July 30, 1993.

Miller alleged that he first became aware of the malpractice settlement after the
settlement was reported to the National Practitioner Data Bank. On March 16, 1995, Miller
filed this action alleging: (1) fraud by omission regarding the failure of his attorneys and their
law firm to provide him notice of the malpractice claim settlement hearing, (2) fraud on the
part of the Fund and the director of the Fund for settling the malpractice claim without
giving him notice, (3) negligence on the part of his attorneys and their firm for failing to
adequately research the claim and advise him of the settlement, (4) negligence on the part of
the Fund and its director for failing to protect the rights and benefits provided to health care
providers by the Health Care Stabilization Act, (5) denial of due process by the State, the
Fund, and the Fund's director for denying him the right to participate in the settlement
hearing, (6) bad faith on the part of St. Paul in failing to protect his interest in settling the
malpractice claim, (7) outrageous conduct against all the defendants, and (8) a request for a
declaratory judgment regarding whether the Fund had authority to employ attorneys to
represent him at the settlement hearing, and if so, whether he and other similarly situated
defendants retain the right to employ their own attorneys to represent their interests at such
hearings.

Miller's assertion that he was unaware of the settlement of the malpractice claim until
it was reported on the National Practitioner Data Bank in December 1992 is not entirely
correct. The incident that led to the patient's injuries occurred on January 21, 1992. On June
30, 1992, Miller filed for bankruptcy in the United States Bankruptcy Court, District of
Kansas. On October 16, 1992, a month prior to the settlement hearing on November 24,
1992, Miller's attorney in the bankruptcy action filed a stipulation to lift the automatic stay.
The motion moved the court to lift the stay to enable the patient to proceed against Miller:

Franklins damages as a result of any judgment, compromise or settlement in the proposed
Montgomery
County Action."

It is clear, therefore, that although Miller was not notified of the date of the settlement
hearing by the attorneys representing him in the medical malpractice matter, he was aware of
the pending settlement negotiations prior to the November 24, 1992, settlement.

A series of defendants' motions for summary judgment were heard by the district
court. On August 27, 1996, the trial court granted summary judgment to Theis, Mitchell, and
Sloan, Listrom, Eisenbarth, Sloan & Glassman as to the fraudulent and outrageous conduct
claims. Regarding the negligence claim, the court found that the attorneys had breached a
fiduciary duty owed to Miller and denied summary judgment to the attorneys. It allowed
additional time for discovery regarding damages. On September 18, 1996, the district court
dismissed all of Miller's negligence claims, including those against the attorneys, finding that
Miller had failed to prove damages.

Miller appeals the grants of summary judgment and dismissal of the case. The
attorney defendants cross-appeal the district court's determination of breach of duty. The
American Osteopathic Association, as amicus curiae, submits a brief on the issue of Miller's
damages.

Standard of Review

When a motion to dismiss raises an issue concerning the legal sufficiency of a claim,
the question must be decided from the well-pleaded facts of plaintiff's complaint. K.S.A.
60-212(b)(6). Dismissal is justified only when the allegations of the petition clearly demonstrate
plaintiff does not have a claim. Grindsted Products, Inc. v. Kansas Corporation
Comm'n, 262
Kan. 294, 302-03, 937 P.2d 1 (1997).

Summary judgment is appropriate when the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving party is entitled to judgment as a
matter of law. The trial court is required to resolve all facts and inferences which may
reasonably be drawn from the evidence in favor of the party against whom the ruling is
sought. When opposing a motion for summary judgment, an adverse party must come
forward with evidence to establish a dispute as to a material fact. In order to preclude
summary judgment, the facts subject to the dispute must be material to the conclusive issues
in the case. On appeal we apply the same rules, and where we find reasonable minds could
differ as to the conclusions drawn from the evidence, summary judgment must be denied.
Saliba v. Union Pacific R.R. Co., 264 Kan. 128, 131-32, 955 P.2d 1189 (1998).

The power of the State to regulate and license professions is not limited to fitness to
practice, but may also include requirements to protect and promote the public health, safety,
morals, peace, quiet, and law and order. It is the public policy of the State to assure an
adequate supply of health care providers and provide protection to patients who may be
injured as a result of medical malpractice.

Under the Act, every resident health care provider, including physicians, is required to
maintain a policy of professional liability insurance. The resident health care providers pay
an annual surcharge to the Fund to qualify for the excess coverage. K.S.A. 40-3404(a). The
duties of the Fund are created by statute. Subject to certain exceptions not applicable in this case, the Fund is
responsible for paying that amount of any judgment in excess of the basic
coverage of the resident health care provider. K.S.A. 40-3403(c)(1).

If a physician is sued for medical malpractice, his liability insurer initially defends the
action. If the physician's basic insurer agrees to tender the limits of its coverage to settle a
claim, but that claim exceeds the amount of such coverage, the insurance commissioner is
authorized to negotiate with the claimant an amount in excess of the liability insurer's
coverage to be paid out of the Fund. The Act contains certain procedural protections to the
provider. K.S.A. 40-3410 provides that once the claimant and the commissioner reach a
settlement, a petition is filed by the claimant with the court for approval of the agreement.
The court sets the petition for hearing as soon as the court's calendar permits, and notice of
the time, date, and place of hearing shall be given to the claimant, the health care provider or
inactive health care provider, and to the commissioner. K.S.A. 40-3410(b). The district court
then conducts a hearing at which the claimant, the health care provider, and the Fund may
appear. If the court finds the settlement valid, just, and equitable, it will approve the
settlement. If the settlement is not approved, the court orders the action to proceed. K.S.A.
40-3411.

Although it is clear that the health care provider must be provided notice of the
hearing to approve the settlement, the statute creates no duty in the Fund to act in the
interest of the health care provider. The statute contemplates that the agreement regarding
the settlement is reached in negotiations between the health care provider's insurer, the Fund,
and the claimant. The commissioner may employ counsel to represent the interests of the
Fund, and the court provides an objective assessment of the reasonableness of the settlement.

Harrison v. Long

In Harrison v. Long, 241 Kan. 174, a medical malpractice action was filed
against Dr.
Long. After investigating the medical malpractice claim against Dr. Long, Dr. Long's
insurance carrier, St. Paul, determined to settle its liability rather than defend the claim
against Dr. Long. St. Paul notified the Fund of its decision. The Fund and the claimant then
entered into negotiations and reached a settlement.

The settlement was approved by the Sherman County District Court over Dr. Long's
objections. Dr. Long filed a motion for relief from the judgment contending that part of the
Act, which allows the Fund to settle actions over the objections of the defendant physician, is
unconstitutional. The district court found the Act constitutional. Dr. Long appealed. The
Fund was allowed to intervene in the appeal.

The Long court found that under the procedural framework of the Act, a
health care
provider is given the opportunity to represent his interests to the court at the settlement
hearing, thus maintaining his procedural due process rights under the Act. It noted that St.
Paul and the Fund settled the claim against the physician without any personal liability to
Dr. Long. It determined that Dr. Long had no right to complain that the action was settled
because the State had a significant overriding countervailing interest. The Long court
concluded that the provisions of the Act, K.S.A. 40-3401 et seq. (Ensley 1981), did
not deprive
a health care provider of a property right, i.e., the right to defend an action, or a due
process
right. The Long court determined that a health care provider has no constitutionally
protected right to require that a plaintiff's action continue for the sole purpose of allowing
the health care provider to vindicate himself or herself.

BAD FAITH CLAIM AGAINST ST. PAUL

On June 7, 1996, the district court here granted summary judgment to St. Paul. The
district court noted that the contract between Miller and St. Paul provided that St. Paul could
settle any suit or claim against its insured if St. Paul considered settlement appropriate. The
court determined because St. Paul had exercised its contractual right to settle the claim within
the monetary limits of Miller's policy, Miller had no claim for breach of good faith.

As to the failure of St. Paul to notify Miller of the settlement hearing, the district
court found that St. Paul's duties to Miller terminated when St. Paul tendered payment equal
to policy limits to the Fund pursuant to K.S.A. 40-3410. After that point the Fund, not St.
Paul, had a duty to notify Miller of a future settlement hearing. In addition, the court held
that pursuant to K.S.A. 60-260(b), a motion to set aside the judgment was a prerequisite for a
separate action claiming relief for wrongful settlement. Because Miller had failed to set aside
the judgment, his claims for wrongful settlement against St. Paul were barred.

Miller contends that the trial court erred as a matter of law in finding that he cannot
sustain a cause of action for bad faith against St. Paul. Miller asserts that notwithstanding the
terms of its policy, St. Paul was aware that he opposed settlement, and it nevertheless settled
the case. Miller contends that St. Paul's action in settling the case was bad faith, and St. Paul
is responsible for the damages resulting from the settlement.

Case law in Kansas concerning the duty of an insurer to settle actions against the
insured focus on the failure of the insurer to accept or initiate a settlement offer. See,
e.g.,
Farmers Ins. Exchange v, Schropp, 222 Kan. 612, 567 P.2d 1359 (1977);
Snodgrass v. State Farm
Mut. Auto Ins. Co., 15 Kan. App. 2d 153, 804 P.2d 1012, rev. denied 248
Kan. 997 (1991). The
Kansas Court of Appeals held in Saucedo v. Winger, 22 Kan. App. 2d 259, Syl.
¶ 3, 915 P.2d
129 (1996), that where an insurance policy explicitly reserves the right to settle to the insurer,
an insured cannot complain that the insurer settles or refuses to settle within policy
limits
absent a showing of bad faith or negligence on the part of the insurer. The
implication is a bad
faith settlement can be the basis of a complaint even where the insurer settles a claim within
policy limits.

The issue of bad faith of the insurer in settlement negotiations has been addressed in
other jurisdictions. In Shuster v. South Broward Hosp. Dist., 591 So. 2d 174 (Fla.
1992), the
court considered whether an insurer could be sued for bad faith where it had settled a case
within the policy limits and the settlement caused other incidental damages to the insured. In
Shuster, a physician sued his insurance company for settling a malpractice action
against him
well within the policy limits. The physician claimed that the insurance company should not
have settled the case because of questionable liability. The settlement had caused the
physician to be investigated by the Division of Professional Regulation. The physician
claimed that the resulting investigation damaged him. The court ruled that the policy of
insurance gave the insurer the right to defend and settle claims as it "deems expedient." 591
So. 2d at 177. The court determined that the insurer had broad discretion as to when and
how to settle a case. The court recognized that the language of the contract would control,
and the "deems expedient" language of the contract allowed the insurer to be guided by its
own self-interest when settling claims within the policy limits. 591 So. 2d at 177.

In Bleday v. OUM Group, 435 Pa. Super. 395, 645 A.2d 1358 (1994),
appeal denied 540
Pa. 591 (1995), the Superior Court of Pennsylvania considered a claim by a physician that his
liability insurance carrier had settled a malpractice claim against him in bad faith. Over the
physician's objections, the insurance company had settled the claim to avoid the cost of
litigation and the uncertainties of a jury trial. After a review of case law from other
jurisdictions, the Pennsylvania court concluded that although judicial deference must be given
to the decision of an insurance company to settle a claim within the policy limits, a claim for
bad faith may, in limited circumstances, be asserted against the insurance company
notwithstanding an expediency provision. 435 Pa. Super. at 399.

The limited circumstances contemplated by the Pennsylvania court included
situations
where there are multiple parties to a lawsuit and the insurer indiscriminately settles with one
or more of the parties for the full amount of the policy, exposing the insured to an excess
judgment from the remaining parties in the suit or where the insurer settles a claim without
regard to the fact that it may be barring a counterclaim of the insured. Based on the facts of
the case and the speculative nature of the damages pled by the plaintiff, the Pennsylvania
court held that the plaintiff had failed to sufficiently plead a cause of action in bad faith. 435
Pa. Super. at 402-03.

K.S.A. 40-3410 provides that when the insurer has agreed to settle liability on a claim
and the claim is an amount in excess of policy limits, the Fund assumes control of the case,
continuing negotiations and bringing the settlement before the district court for approval of
the settlement.

Pursuant to the terms of its insurance contract, St. Paul chose not to defend the
malpractice claim against Miller. Pursuant to the Act, it agreed to settle Miller's liability to
the claimant within its policy limits and notified the Fund of its intention. Under the Act,
the insurance commissioner was then entitled to negotiate an amount to be paid from the
Fund as a settlement or continue to defend the action against Miller. Similar to Miller's
contract with his liability carrier, the Act requires no waiver or consent of the health care
provider for the Fund to settle the action with the claimant without the consent of the health
care provider.

After St. Paul tendered its policy limits to the Fund, the Fund, pursuant to statute,
retained the attorneys who had been initially employed by St. Paul, to continue representing
Miller and the Fund's interest during negotiations of the claim. Therefore, the Fund, not St.
Paul, employed the attorneys to represent Miller prior to the settlement hearing. St. Paul did
not breach its duties of loyalty and allegiance by not notifying Miller of the settlement
hearing or retaining attorneys on his behalf who failed to provide him with notice of the
settlement hearing. The district court's grant of summary judgment in favor of St. Paul was
not error.

NEGLIGENCE CLAIMS AGAINST GOVERNMENT DEFENDANTS

On June 22, 1995, the trial court dismissed the case against the State of Kansas, the
Fund, and the Fund's director, Robert Hayes, based on governmental immunity. The court
found that the State and government defendants were immune from Miller's claim of
negligent settlement of the malpractice claim. Miller contends that the trial court erred
because the Kansas Tort Claims Act (KTCA), K.S.A. 75-6101 et seq., provides
statutory
consent to sue the government and government employees.

The KTCA states that unless a statutory exception to liability applies, a governmental
entity shall be liable for damages caused by the negligent or wrongful act or omission of any
of its employees while acting within the scope of their employment under circumstances
where the governmental entity, if a private person, would be liable under the laws of this
state. K.S.A. 75-6103(a); P.W. v. Kansas Dept. of SRS, 255 Kan. 827, Syl. ¶
1, 877 P.2d 430
(1994).

To prevail on the negligence and fraud claims against the government
defendants,
Miller must prove that the Fund owed him a duty, the Fund breached that duty, and Miller
sustained damages caused by the breach. On September 18, 1997, the district court dismissed
all of Miller's negligence claims, finding that Miller had failed to prove damages. Miller
asserts that the Fund has a duty to settle malpractice claims only when reasonable to do so.

We observe thatin third-party claims, a private insurance company, in
defending and
settling claims against its insured, owes a duty to the insured not only to act in good faith but
also to act without negligence. Farmers Ins. Exchange v. Schropp, 222 Kan. 612.
However, the
Fund is not a private insurance company and is not analogous in all respects to a private
insurance company. For instance, unlike a private insurance company, the Fund, under the
Act, is immune from bad faith liability. K.S.A. 40-3412(c). See Aves v. Shah, 258
Kan. 506,
519, 906 P.2d 642 (1995) (holding bad faith on the part of the Fund in refusing to settle a
claim merely to avoid paying a large settlement does not give rise to an action against the
Fund by the health care provider for damages).

With certain exceptions not applicable to this case, the Act provides that it is the Fund, not the provider, which is responsible for paying any difference above the coverage of the liability insurance. See K.S.A. 40-3403(c). It is, therefore, implicit in the Act that where claims are settled
within the Fund's liability limits, providers relinquish their right to prevent a settlement. To allow physicians to control the defense of malpractice claims against them and reach their own decisions to continue or to settle the action would undermine the whole purpose and the financial
structure of the Act. Harrison, 241 Kan. at 181.

Because the Fund had no duty under the KTCA to Miller and the settlement
created no liability in excess of that provided by the Act for negligent failure to settle a
claim or failure
to settle a claim in good faith, Miller's negligence and fraud claims against the Fund cannot
succeed. The trial court did not err in granting summary judgment in favor of the Fund.

OUTRAGEOUS CONDUCT, FRAUD, AND NEGLIGENCE CLAIMS

AGAINST ATTORNEYS

Tort of Outrage

To prove the tort of outrage, a litigant must show: (1) The conduct of the defendant
was intentional or in reckless disregard of the plaintiff; (2) the conduct was extreme and
outrageous; (3) there was a causal connection between the defendant's conduct and the
plaintiff's mental distress; and (4) the plaintiff's mental distress was extreme and severe.
Smith
v. Welch, 265 Kan. 868, 876, 967 P.2d 727 (1998).

The tort of outrage has two threshold requirements that the district court must
determine: (1) whether the defendant's conduct may reasonably be regarded as so extreme
and outrageous as to permit recovery; and (2) whether the emotional distress suffered by the
plaintiff was of such extreme degree the law must intervene because the distress inflicted was
so severe that no reasonable person should be expected to endure it. 265 Kan. at 876. In
order for conduct to be deemed sufficient to support the tort of outrage, it must be so
outrageous in character and so extreme in degree as to go beyond the bounds of decency and
to be regarded as atrocious and utterly intolerable in a civilized society. Fusaro v. First
Family
Mtg. Corp., 257 Kan. 794, 805, 897 P.2d 123 (1995).

The district court reasoned that for liability to flow from legal malpractice, these
elements must exist: (1) There must be an attorney-client relationship giving rise to a duty;
(2) the attorney must have breached that duty by act or omission; (3) the breach of duty must
have proximately caused injury to the client; and (4) the client sustained actual damages.
Phillips v. Carson, 240 Kan. 462, 476, 731 P.2d 820 (1987).

The court found that it was undisputed that the attorneys were retained by St. Paul to
represent the interests of Miller. The duty created by this relationship is fiduciary in
character. Such a relationship binds the attorney the highest degree of fidelity and good faith
to his client on account of the trust and confidence imposed.

Regarding the breach of duty, the court observed that an omission which leaves a
client uncertain as to material aspects of his legal representation constitutes breach of the
fiduciary duty owed by an attorney. Winter v. Hope, 253 Kan. 678, 861 P.2d 1282
(1993).
This breach of duty is underscored by the Kansas Rules of Professional Responsibility
(KRPC) adopted in this state. Specifically, KRPC 1.4 (1998 Kan. Ct. R. Annot. 296) provides:

"

It was undisputed that the attorneys failed to provide Miller with notice of a
settlement hearing. A reading of the pleadings, most favorable to Miller, indicates the
attorneys accepted representation of a client without even making the client aware of the
representation. An act of omission rising to this level cannot satisfy the demands of a
fiduciary duty requiring an attorney to act with due regard to the interests of the one
reposing the confidence.

While there appears to be no question that the defendants breached their duty to
Miller, it does not necessarily follow that this violation caused Miller damage. There can be
no finding of malpractice absent a showing of both departure from standards and causal
injury. Leeper v. Schroer, Rice, Bryan & Lykins, P.A., 241 Kan.
241, 736 P.2d 882 (1987);
Phillips v. Carson, 240 Kan. 462. In addition to the two threshold requirements for a
negligence claim, "there can be no recovery for emotional distress by negligence unless
accompanied by or resulting in physical injury." Fusaro v. First Family Mtg. Corp.,
257 Kan.
794, 806, 897 P.2d 123 (1995) (citing Humes v. Clinton, 246 Kan. 590, 598, 792
P.2d 1032
[1990]).

In the instant case, Miller asserts he is entitled to recover damages for the alleged
emotional distress caused by the defendants' actions. It is undisputed that Miller had no
notice of the settlement hearing and that the defendants represented Miller's interests at
various times. In Miller's pleadings, however, there is insufficient claim that the attorneys'
action was willful, wanton, or even purposeful. Reading Miller's pleadings to their most
favorable interpretation do not show conduct rising to the level of "extreme and outrageous."
Additionally, Miller fails to provide evidence of any physical manifestation of injury that
occurred as a result of alleged emotional distress.

Conduct which is not extreme and outrageous coupled with a lack of evidence of
physical manifestation of injury fail to meet the threshold requirements of the tort of
outrage. The attorneys' actions were not so extreme in degree as to be regarded as utterly
atrocious or intolerable in a civilized society. Additionally, any claim for emotional distress
based on the attorneys' conduct must fail without physical manifestation of injury that
occurred as a result of the alleged emotional distress; therefore, the claims based on the tort of
outrage and emotional distress fail as a matter of law.

The district court determined that the attorney defendants' actions in failing to keep
Miller apprised of the progress of his case and in failing to notify him of the settlement
hearing was a serious breach of fiduciary duty. The court held, however, that the conduct did
not rise to the level of conduct so extreme and outrageous as to permit recovery on the tort
of outrage.

We agree and affirm the district court's grant of summary judgment on the tort of
outrage.

Fraud By Silence and Negligence

Under the rules of civil procedure, fraud is a special matter. The applicable statutory
requirement reads:

The district judge held that the concealment alleged by Miller did not rise to the
actionable level of fraud by silence under current Kansas law. Additionally, the court stated
that Miller failed to plead fraud with sufficient particularity as required by K.S.A. 60-209(b).

On appeal Miller contends that he alleged facts in his pleadings with sufficient
particularity and provided sufficient evidence of fraud by silence to withstand a motion for
summary judgment on the fraud claim.

In all averments of fraud, the circumstances constituting fraud shall be stated with
particularity. K.S.A. 60-209(b). To establish fraud by silence, the plaintiff must show by
clear and convincing evidence the following elements: (1) that defendant had knowledge of
material facts which plaintiff did not have and which plaintiff could not have discovered by
the exercise of reasonable diligence; (2) that defendant was under an obligation to
communicate the material facts to the plaintiff; (3) that defendant intentionally failed to
communicate to plaintiff the material facts; (4) that plaintiff justifiably relied on defendant to
communicate the material facts to plaintiff; and (5) that plaintiff sustained damages as a result
of defendant's failure to communicate the material facts to plaintiff. OMI Holdings, Inc. v.
Howell, 260 Kan. 305, Syl. ¶ 6, 918 P.2d 1274 (1996).

In Miller's first amended petition, he specifically pled fraud as a count against the
attorney defendants. Miller alleged that the attorney defendants had knowledge of material
facts which he did not have and could not have discovered by the exercise of reasonable
diligence. The material facts alleged in Miller's petition were that the attorneys were
authorized to act as his legal counsel, yet they negotiated a settlement, scheduled a settlement
hearing, and participated in the hearing for the purpose of acquiring court approval for
payments to be made on his behalf for which he received no benefit. Miller also alleged that
others with this knowledge were prohibited from communicating with him because he was
represented by the attorneys. Miller further alleged that the attorneys were under an
obligation to communicate the material facts to him, they intentionally failed to do so, and
he justifiably relied on an assumption that any attorney retained to represent him would
communicate material facts to him. Miller stated that he sustained substantial damages as a
direct and proximate result of the attorneys' failure to communicate with him. The
delineated damages were: increased medical malpractice insurance premiums; increased
charges imposed by the Fund; decreased patient referrals; lost income; the impugning of his
professional confidence; embarrassment, humiliation, anxiety, and depression; and time and
monies expended to obtain replacement medical malpractice insurance.

Clearly, Miller averred fraud with particularity in compliance with K.S.A. 60-209(b).
However, this does not dispose of the issue because the pleadings and depositions of Miller do
not show that Miller sustained damages as a result of the attorneys' omissions or silence.

The damages delineated by Miller in his petition were not damages sustained as a
result of the defendant attorneys' failure to inform Miller of developments in the malpractice
claim. The damages identified in Miller's petition were sustained by Miller as the result of
having a significant malpractice claim against him. Those damages do not support any claim
that the actions or omissions of the defendants in defending Miller on the malpractice claim
caused Miller damages.

Based on a lack of identifiable damages, we affirm the trial court's dismissal of Miller's
claims of outrageous conduct, fraud, and negligence.

Wrongful Settlement

K.S.A. 60-260(b)(6) provides that upon a motion, the court may relieve a party from a
final judgment, order, or proceeding for any reason justifying relief from the operation of the
judgment. The district court declined to grant Miller relief for wrongful settlement, finding
that Miller had waived that right by failing to exercise his statutory right to relief from the
judgment.

It is the duty of the courts to decide actual controversies by a judgment which can be
carried into effect, and not to give opinions upon moot questions or abstract propositions, or
to declare principles which cannot affect the matters in issue before the court. Shanks v.
Nelson, 258 Kan. 688, Syl. ¶ 2, 907 P.2d 882 (1995).

Miller's claims of negligence, bad faith, outrageous conduct, and fraud were
determined by the district court when it granted the defendants' motions for summary
judgment and in dismissing the action. Because none of Miller's claims were sustainable and
we affirm the trial court's rulings, the issue of whether Miller waived his claims by failing to
move the court to set aside the settlement is moot.

Because the trial court's dismissal of Miller's case is affirmed, the issues raised in
cross-appeal by the attorneys and their firm are moot and need not be addressed.

Affirmed.

ALLEGRUCCI, J., not participating.

JAMES W. PADDOCK, Senior Judge, assigned.1

1REPORTER'S NOTE: Judge Paddock was appointed to hear case No. 80,116
vice Justice Allegrucci pursuant to the authority vested in the Supreme
Court by K.S.A. 20-2616.